Wyndham Worldwide Corporation (
announced third quarter 2012 adjusted earnings of $1.13 per
share, which surpassed the Zacks Consensus Estimate of $1.10 and
improved 20% year over year. On a reported basis, Wyndham
delivered earnings of $1.11 cents per share versus $1.08 in the
The increase in earnings was mainly driven by a surge in revenue
per available room (RevPAR) in the Lodging business as well as
strong operational performance of the Vacation Ownership
business. Moreover, the company's share repurchase program also
pushed up the earnings for the quarter.
Net revenue climbed 4% year over year to $1,265.0 million in the
reported quarter and also beat the Zacks Consensus Estimate of
$1,264.0 million. The increase reflected growth across Wyndham's
Vacation Ownership and Hotel businesses, partially offset by a
decline in Vacation Exchange and Rentals business arising from
unfavorable currency impact.
Inside the Headline Numbers
The company's Lodging segment reported revenue of $249.0 million
for the quarter, up 12% year over year, driven by a 3.0% rise in
RevPAR, market share gain and higher licensing fees.
Revenues from the Vacation Exchange and Rentals segment dropped
3.7% year over year to $420.0 million. However, in constant
currency, excluding the impact of acquisitions, segment revenues
remained flat. Vacation rental revenues were $248.0 million, down
5% and Exchange revenues were $157.0 million, down 2% year over
Revenues from the Vacation Ownership segment at Wyndham rose 9.0%
to $608.0 million, on the back of increased Vacation Ownership
At the end of the quarter, Wyndham owned approximately 7,260
properties or 618,100 rooms. The development pipeline included
around 950 hotels and approximately 108,300 rooms, of which 55%
were newly constructed and 47% were in the international market.
Wyndham exited the quarter with cash and cash equivalents of
approximately $230.0 million as compared with $142.0 million at
the end of 2011. As of June 30, 2012, long-term debt was $2.5
billion versus $2.2 billion at December 31, 2011.
During the quarter, the company repurchased approximately 2.6
million shares of its common stock for a total price of $133.0
million. For the next quarter, Wyndham has repurchased 915,000
shares for $49.0 million. The company currently has $608.0
million remaining under its current share repurchase
For full-year 2012, management revised its revenue, earnings
per share and EBITDA guidance. The company raised its revenue
expectation from $4.425-$4.6 billion to $4.5-$4.6 billion.
Wyndham increased the earnings per share guidance range from
$3.10-$3.20 to $3.15-$3.20 and adjusted EBITDA outlook from
$1.040-$1.055 billion to $1.045- $1.055 billion.
STARWOOD HOTELS (HOT): Free Stock Analysis
MARRIOTT INTL-A (MAR): Free Stock Analysis
WYNDHAM WORLDWD (WYN): Free Stock Analysis
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Despite the challenging economic environment, Wyndham's
achievement of 20% growth in adjusted earnings for three
consecutive quarters, better-than-expected earnings report and
continued increase in earnings guidance depicts the strength in
the company's fundamentals.
Moreover, we expect the company to benefit from its shift to a
more fee-for-service-based business, free cash flow generation,
increased global travel demand and international expansion. Based
on third quarter results and increased overall guidance, we
expect the estimates to go up in the coming days.
One of Wyndham's competitors,
Marriott International Inc. (
, reported third quarter 2012 earnings of 44 cents per share,
surpassing the Zacks Consensus Estimate and year-ago quarter
adjusted earnings of 29 cents per share.
Wyndham, which also competes with
Starwood Hotels & Resorts Worldwide Inc. (
, currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. We are also maintaining our long-term
Neutral recommendation on the stock.